DOZENS OF independent mobile phone retailers are set to stop selling O2 products following a decision by the company to change its distribution strategy.
Some dealers will be given the opportunity to rebrand and become O2 franchisees but they will have to drop products from other networks.
Many others are expected to stop selling the network’s products over the next few months.
Retailers have been given the news over the last fortnight and the company is giving them “time to digest it and hold discussions”.
The rapid growth in the mobile phone sector over the last 10 years meant the network had needed a “wide and expansive distribution footprint”, an O2 spokeswoman told The Irish Times. However, it decided to review its distribution strategy as the market has reached “maturity and saturation”.
The move will affect about 25 independent mobile phone retail specialists, most of which have more than one outlet. It will also affect some 50 mobile phone dealers who sell other goods such as electronics.
Large reseller chains such as Carphone Warehouse will not be affected.
Working more closely with some independent dealers through franchising will give a “better experience for customers and give more efficiencies”, the O2 spokeswoman said.
The company has received a “very positive response” so far from independent retailers to franchising opportunities and hopes it will make up a significant part of its retail operations.
Talks are still going on between dealers and the mobile network. The spokeswoman could not yet confirm how many stores will become franchises and what the cost of a franchise would be.
Many independent mobile phone retailers contacted by The Irish Times were shocked by the move and fearful for the future of their businesses.
Michael McDermott of Nationwide Cellular has been involved in the mobile phone business for 18 years and has stores in Tullamore and Portlaoise.
His business was already down 30 per cent on this time last year, he said, and the move by O2 would probably remove 25 per cent of his gross profit. Other dealers could lose up to 60 per cent of their business, he added.
Mr McDermott said few dealers would be able to afford the franchise fee in the present economic climate and he estimated that 20 independent mobile phone retailers would close by the end of the year as a result of the move.
